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Ex-CEO of Point Blank Sentenced to 17 Years in Fraud Case

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Aug. 15 (Bloomberg) -- The founder of military body armor supplier Point Blank Solutions Inc. was sentenced to 17 years in prison for siphoning away millions of dollars in company money and trading on inside information as part of a series of frauds that prosecutors say almost destroyed the business.

David H. Brooks, 58, was sentenced by U.S. District Judge Joanna Seybert today in federal court in Central Islip, New York, almost three years after his conviction. The charges against him stemmed from accounting misstatements and the sale of $185 million worth of stock before the scheme was revealed.

Accused of spending company money on items such as a $100,000 diamond belt buckle, leather-bound invitations for his son’s bar mitzvah, care for 100 purebred trotting horses and family trips on a company Learjet, Brooks showed “not a glimmer” of remorse in the courtroom, Seybert said in the hearing today.

“The defendant to this very day insists he has done nothing wrong,” Seybert said before issuing her decision. “That position that the defendant takes does indeed worry the court.”

Formerly known as DHB Industries Inc., Pompano Beach, Florida-based Point Blank was once the largest supplier of body armor to the American military and provided gear used by troops in Iraq and Afghanistan. The company, which filed for bankruptcy in April 2010, was driven into insolvency by Brooks’s actions, Scott Avila, the company’s chief restructuring officer, said during the hearing. The company’s assets were purchased by private equity firm Sun Capital Partners Inc. for $36.6 million in 2011.

Company ‘Victimized’

“The company was victimized,” Avila said. “The conduct destroyed the company’s reputation.”

Brooks and former Chief Operating Officer Sandra Hatfield lied about inventory of “Interceptor” combat vests that were shipped to the U.S. armed forces and falsely inflated the company’s value and their own stock, the government said.

They were convicted in 2010 by a jury on charges of insider trading, fraud and obstruction of justice. Hatfield hasn’t been sentenced yet.

Brooks, who has been diagnosed with a list of mental illnesses including bipolar, panic and obsessive compulsive disorders, paranoia and depression, claimed he was mentally incompetent for part of the trial. His lawyers argued that his mental issues and a difficult childhood, during which he was led to be distrustful of others by his mother, a Holocaust survivor, weighed in favor of a more lenient sentence than the 30 years or more prosecutors were seeking.

“Everybody outside the family was an enemy,” said Gustave H. Newman, one of several defense lawyers who represented Brooks in the sentencing. “That accounted for the weird behavior.”

Bail Revoked

During his eight-month trial, Brooks’s bail was revoked when the government discovered he had concealed millions of dollars in accounts in San Marino and London. After being taken into custody, he was temporarily denied access to Ativan and other benzodiazepines, causing him to suffer panic attacks, his lawyers alleged.

Brooks was caught smuggling Ativan pills to jail from the courtroom in the waistband of his pants in January 2010, according to court papers. Later, he was held in contempt after the judge discovered he had created a fake e-mail that his attorney tried to use in cross-examining a witness, according to the government.

The government heard from at least 9,000 investors who had lost money as a result of Brooks’ schemes, Assistant U.S. Attorney Richard Lunger said.

“Brooks engineered the destruction of a public company, your honor,” Lunger said. “It was a company supported by investors who believed in what they thought DHB’s mission was, protecting lives, not Mr. Brooks’s vanity.”

The case is U.S. v. Brooks, 06-cr-00550, U.S. District Court, Eastern District of New York (Central Islip).

To contact the reporter on this story: Christie Smythe in Brooklyn at csmythe1@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

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